How are fees charged in the investment account?
In a Darwinex investment account, fees are charged against the available balance, without automatically reducing open investments. This allows both the invested capital and any accumulated profits to remain invested.
How are the funds in the account displayed?
The account equity is calculated as follows:
Equity = Invested + Open P&L + Available
- Invested: the original capital allocated to open investments.
- Open P&L: the accumulated profit or loss on those investments.
- Available: cash that is not invested and can be used for new purchases or to offset fees.
For example, if you have €10,000 and invest the full amount:
- Invested: €10,000
- Open P&L: €0
- Available: €0
- Equity: €10,000
What fees apply?
The account is subject to two types of fees:
Management fee
The management fee is 1.2% per year, accrued daily on the equity of each investment.
The actual amount depends on the daily performance of the investment. Weekends and holidays on which the DARWIN is not quoted are not included in the calculation.
Performance fee
The performance fee is 20% of profits above the applicable high-water mark and is calculated quarterly.
When a profitable sale is made during the quarter, the corresponding fee may be retained until the end of the period. At that point, Darwinex checks whether the net profit exceeds the high-water mark. If it does not, the retained amount is returned.
Why can the available balance become negative?
Fees are charged against the available balance. If all the capital is invested and the available balance is zero, these charges may cause it to become negative.
This amount reflects fees charged or advanced by Darwinex when there was not enough available cash in the account. It does not constitute a loan and does not generate interest, additional fees or any other cost.
The negative balance is automatically settled when:
- New funds are deposited or transferred into the investment account.
- A full or partial sale of an investment is made.
Practical example
Suppose you invest €10,000 and, after one year, the investment has generated a gross return of 20%:
- Invested: €10,000
- Open P&L: +€2,000
- Gross investment value: €12,000
For simplicity, assume that the following fees have accrued:
- €120 in management fees.
- €400 in performance fees, assuming the full €2,000 exceeds the applicable high-water mark and is subject to the fee.
The available balance would be approximately −€520, meaning that the net account equity would be:
€10,000 + €2,000 − €520 = €11,480
These amounts are illustrative. The management fee is calculated on daily equity, while the performance fee depends on the applicable high-water mark.
What happens when the investment is sold?
If you sold the entire position, the sale would release the original €10,000 invested plus the accumulated profit:
- Gross sale value: €12,000
- Negative available balance: −€520
- Approximate final available balance: €11,480
The negative balance therefore does not represent an additional cost. It simply records fees that are offset once cash becomes available in the account.
What amount should I enter when selling?
The sale amount is based on the original capital invested, not on the current value of the position.
If you originally invested €10,000 and want to sell the entire investment, you should enter:
Sale amount: €10,000
This will sell the original €10,000 together with all profits or losses accumulated on that investment.
If you enter a sale amount of €5,000, you will be selling approximately 50% of the position. In an example involving a single purchase, this would include €5,000 of the original capital and the corresponding proportion of the accumulated result.
When several purchases have been made in the same DARWIN, sales are processed using the FIFO —First In, First Out— method, meaning that the oldest investments are sold first. As a result, the outcome of a partial sale may not exactly match a proportional share of the total result.
Why does it work this way?
This system avoids the need to make small periodic sales solely to pay fees.
By charging fees against the available balance:
- The capital remains invested.
- Open profits can remain reinvested.
- The effect of compounding is maintained.
- No additional cost is applied for holding a negative available balance.
In summary, fees are charged as normal, but their cash settlement takes place when an investment is sold or when new funds enter the account.